RESEARCH & FORECAST REPORT

DARWIN RESIDENTIAL

Q3 2014| RESIDENTIAL

www.colliersnt.com

September: “Capital growth steadies”...

SEPTEMBER QUARTER HIGHLIGHTS

• Darwin median house price recorded at $648,000 • Palmerston’s median house price recorded at $572,500 • Increased volume of apartment sales due to new developments settling • Slower level of transactions from June quarter

RESIDENTIAL MARKET OVERVIEW

In the September quarter the Darwin residential market recorded steady sales figures,

although total sales volume was lower than recorded in the June quarter.

The total sales value of all residential property in Darwin and Palmerston in the

September quarter was $422.6 million and comprised of 770 transactions. By comparison

in the June quarter of 2014 there was a total value of $489.6 million with 935 transactions

recorded. In the regional breakdown, Darwin and the Northern Suburbs recorded $343.2

million in sales, whilst Palmerston recorded $79.5 million in sales.

It was noted that units in the Darwin area comprised of 57% of all property sales in the

September quarter. The majority of these units were settlements of newly developed

buildings, with only a small portion of sales coming from established apartment stock. It

appears that the new apartments have absorbed the bulk of the market demand and as

such, we have seen the pricing of established stock come back slightly.

Recent figures published by RP Data indicate that Darwin still records the highest rental

yields in Australia, with houses currently returning a yield of 5.9% and units returning a

yield of 6.0%. Darwin has maintained the highest rental yields in Australia for the past two

years.

MARKET INDICATORS FORECAST 6 MONTHS

OVERALL PERFORMANCE

TRANSACTION ACTIVTY

SUPPLY

DEMAND

SENTIMENT

VACANCY RATE

ECONOMIC GROWTH

INFRASTRUCTURE

POPULATION GROWTH

Suburb Transactions Median Price

Bellamack 16 $665,000

Nakara 13 $680,000

Karama 12 $542,000

Durack 11 $560,000

Rosebery 9 $710,000

Ludmilla 9 $672,000

Jingili 9 $640,000

Woodroffe 9 $470,000

SUBURBS WITH MOST ACTIVITY

3 Sariago Court, Woolner

COLLIERS INTERNATIONAL —P. 2

RENTALS

There had been a noticeable market adjustment in the Darwin rental

sector over the September quarter. Nonetheless, RP Data reported that

Darwin maintains the strongest rental returns in Australia with an

average yield of 5.9% for houses and 6.0% for units.

As expected, the abundance of new stock has helped balance supply

issues and has eased the demand that previously pushed rents to

unsustainable levels. In particular, there has been a significant increase

in CBD apartments and in new houses in the Palmerston area. This has

seen an increase in the Colliers in-house vacancy rate which was

recorded at 3.3%. As a result, rental returns have stabilised and it is

anticipated that there will be limited growth in rental rates over the next

6 -12 months.

PROPERTY INNER DARWIN NORTHERN SUBURBS PALMERSTON

House- 3 Bed / 2 Bath $700—$900 $500—$700 $500—$700

House- 4 Bed / 2 Bath $990—$1100 $700—$900 $650 —$850

House- Executive $1000—$1500 $800—$1000 $800—$1000

Unit- 1 Bed / 1 Bath $450—$550 $350—$400 $350—$400

Unit- 2 Bed / 2 Bath $600—$800 $450—$650 $400—$600

Unit- 3 Bed / 2 Bath $700—$900 $550—$750 $500 — 700

Unit- Executive $800- $1200 n/a n/a

WEEKLY RENTAL RATES

UNITS

Apartment sales were the strongest performing sector in the September

quarter, although this was notably due to a large amount of settlements

on new developments. The highest volume of sales in 3 years was

recorded with 443 transactions recorded and a total sales value of

$238.5 million. This also reflected a stronger median price of $530,000,

which had increased from the previous quarter where it was recorded at

$510,000. By comparison in the June quarter there were 374 apartment

sales recorded with a total sales value of $196 million.

From a price range perspective, 30% of apartment sales occurred

between $500,000 and $600,000 and a further 25% of sales occurred

between $400,000 and $500,000.

Inevitably due to new development, Darwin CBD recorded the most sales

activity over the September quarter with 206 transactions and a median

price of $537,825. This equated to $112.7 million in sales and comprised

47% of all apartment sales in Darwin and the Northern Suburbs. The

highest CBD sale was priced at $1.87 million for an exclusive apartment

on the Esplanade.

The second highest volume of sales was recorded in Parap where there

were 116 transactions with a median price of $534,500. This equated to

a total sales value of $64.7 million and was attributable to the settlement

of new apartments in The Avenue complex on Salonika Street, Parap.

Parap has become a popular suburb for apartment purchasers, as it is 5

minutes out of the CBD yet still retains a relaxed village atmosphere and

boasts its own Saturday village markets.

In Palmerston, apartment activity was slower with 36 transactions

recorded. These sales totalled $16.3 million and reflected a median price

of $406,000. By comparison in June quarter there were 76 transactions

record with a total sales value of $33.4 million. In the September quarter,

the majority of sales in Palmerston were priced between $300,000 and

$500,000 with the lower priced stock reflecting the sale of established

apartments in the area.

DARWIN UNITS – TOTAL SALES VALUE

Source: Land Titles Office & Colliers International Research

RESEARCH & FORECAST REPORT | Q3 2014 | RESIDENTIAL | DARWIN

Source: Colliers International Research & Realestate.com.au

COLLIERS INTERNATIONAL — P. 3

DARWIN HOUSE PRICES

In the September quarter the volume of house sales was slightly down

on the previous quarter, although overall sales activity was steady.

There were 153 transactions recorded with a total sales value of $104.6

million and these sales reflected a median price of $648,000.

By comparison, in the June quarter there were 161 transactions

recorded with a total sales value of $121 million and a median price of

$643,000.

As such, the majority of Darwin houses that sold in the September

quarter continued to be priced between $500,000 and $600,000 and

comprised 30% of all home sales. This was followed by a further 26%

of house sales priced between $600,000 and $700,000, which reflected

older homes in the Northern Suburbs.

In terms of strong buyer activity, the suburb of Nakara recorded the

highest level of buyer activity for houses in Darwin with 13 transactions

recorded and a median price of $680,000. This was an unusual figure

as Nakara, has typically been a tightly held suburb recording few sales

every year. The second highest level of buyer activity was recorded in

Karama, with 12 transactions recorded and a median price of $542,000.

Karama has grown in popularity over the last few years as it continues

to offer a quasi affordable entry point into the market for young families.

PALMERSTON HOUSE PRICES

The volume of house sales slowed in Palmerston over the September

quarter with 81 transactions recorded. This equated to total sales value

of $47.2 million and reflected a reduced median price of $575,000.

By comparison, in the June quarter there was a total sales value of

$75.2 million with 126 transactions recorded and a median price of

$588,000. It appears that new land releases in Palmerston may have

drawn buyers away from the established house market, and encouraged

buyers to buy vacant land to build their own homes.

In terms of pricing, buyer activity in Palmerston continued to be highest

between $500,000 and $600,000 and comprised 35% of all home sales

in the area. This was followed by 30% of houses sold between $600,000

and $700,000, and reflected sales in the newer suburbs of Palmerston

such as Bellamack and Rosebery.

Over the September quarter the most popular suburb in Palmerston was

Bellamack with 16 sales recorded and a median price of $665,000.

This was followed by Durack where there were 11 sales recorded and a

median price of $560,000. In general, there is limited existing houses in

Palmerston priced under $500,000.

LAND

Land sales dried up over the September quarter; however this trend is

not too unusual as it is reflective of the nature of bulk land subdivisions.

There were no land sales recorded in Darwin during the September

quarter, however this is expected to increase over the next 6-12 months

as further blocks are released in Muirhead.

In Palmerston there was also a slowdown in land sales with just 56

settlements and a total sales value of $16 million. These sales equated to

a median price of $265,000, and reflected a large number of titles issued

for land in Johnston.

It is anticipated that over the next few months there will be another rise in

land settlements as further titles are issued in the new stages of Zuccoli

and Durack. These new subdivisions have been marketing smaller

allotment sizes to accommodate increasing demand for more affordable

land prices, and this is anticipated to help alleviate the strain for buyers.

RESEARCH & FORECAST REPORT | Q3 2014 | RESIDENTIAL | DARWIN

TOP TEN SALES

Suburb Property Description Price

Darwin Unit 4/68 B Esplanade Apartment $1.87 m

Larrakeyah 17 Hickey Court House $1.65 m

Jingili 47 Freshwater Road City Rural $1.45 m

Nightcliff 5 Coolibah Street House $1.30 m

Darwin Unit 436/130 Apartment $1.30 m

Fannie Bay 7 Kellaway Street House $1.25 m

Parap 47 May Street House $1.205 m

Darwin Unit 22/99 Gardens Road Apartment $1.20 m

Darwin 29/3 Manton Street Penthouse $1.20 m

Ludmilla 10 Bremer Street House $1.145 m

Source: Land Titles Office & Colliers International Research

2/10 Sovereign Court, Coconut Grove

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OUTLOOK

Overall the Australian economy has fared well over the past 3 months despite tightening federal

conditions. Whilst some segments of the economy have experienced flat conditions, the property

market has been at the centre of economic activity in 2014 with strong activity in Sydney, Queensland

and Darwin.

The official cash rate continues to remain on-hold at 2.5%, with many economists predicting that rates

will remain stable until early next year. The Reserve Bank of Australia has been cautious with interest

rate movement so as not to add too much heat to the property market, however over the past 3

months it appears that capital growth is stagnating in some areas. As such, many anticipate that the

most prudent course moving forward would be to keep interest rates stable.

According to the Territory Economic Review, the NT benefits from a strong workforce and records the

highest employment participation in Australia at 72.6%. In terms of unemployment, the Territory

records the lowest unemployment rate of all jurisdictions at 4.3% well below the national average of

6.0%.

Economic activity in the NT continues to be centered on projects and construction activity, with both

sectors contributing positively to job creation in the Territory. In 2013-14, total construction work in the

Territory was recorded at $6.0 billion and private non-residential reflected construction work done

increased by 3.7 per cent to $1.1 billion.

In the residential sector, private residential construction was the highest annual total on record and

increased by 35.6 per cent to $729 million. This growth has been primarily driven by the construction

of several large scale unit developments in Darwin and city fringe suburbs. As discussed previously,

over the past 12 months there has been an increased supply of new dwellings in Darwin, particularly

of apartments. The bulk of this demand has so far been absorbed by investors, although now that a

large portion of these properties have settled, it appears that remaining stock is helping to alleviate

supply pressures and therefore helping to stabilize property prices in the Territory.

Moving forward, the indicators for the Darwin residential market appear stable for the year ahead and

steady transactional activity is anticipated over the next 6 months.

Information Sources:

Easy Access, ABS, Land Titles Office, REINT, NT Treasury, Territory Economic Review, RP Data, Westpac Melbourne Institute, Realestate.com.au, Colliers International Research Darwin

RESEARCH & FORECAST REPORT | Q3 2014 | RESIDENTIAL | DARWIN

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RESEARCHER

Lianna Georges

Research Analyst

EMAIL lianna.georges@colliers.com

Colliers International does not give any warranty in

relation to the accuracy of the information contained

in this report. If you intend to rely upon the

information contained herein, you must take note that

the information, figures and projections have been

provided by various sources and have not been

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